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Cablegate: Westinghouse Acquires Local Nuclear Supplier

VZCZCXRO6457
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #3839/01 3060709
ZNR UUUUU ZZH
R 020709Z NOV 07 ZDK ZUI RUEACSA 1934 3061038
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 2522
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0690
RUEHRL/AMEMBASSY BERLIN 0562
RUEHBY/AMEMBASSY CANBERRA 0569
RUEHLO/AMEMBASSY LONDON 1352
RUEHMO/AMEMBASSY MOSCOW 0695
RUEHOT/AMEMBASSY OTTAWA 0523
RUEHFR/AMEMBASSY PARIS 1211
RUEHTN/AMCONSUL CAPE TOWN 5012
RUEHDU/AMCONSUL DURBAN 9321
RUEHJO/AMCONSUL JOHANNESBURG 7696

UNCLAS SECTION 01 OF 02 PRETORIA 003839

SIPDIS

SIPDIS
SENSITVE

STATE PLEASE PASS USAID
STATE PLEASE PASS USGS
DEPT FOR AF/S, ISN, EEB/ESC AND CBA
DOE FOR T.SPERL, G.PERSON, A.BIENAWSKI, M.SCOTT, L.PARKER

E.O. 12958: N/A
TAGS: ENRG BEXP TRGY SENV KNNP EINV SF
SUBJECT: WESTINGHOUSE ACQUIRES LOCAL NUCLEAR SUPPLIER

REF: A) Pretoria 3747
B) Pretoria 3078
C) Pretoria 3012

PRETORIA 00003839 001.4 OF 002


Not for internet distribution

1. (SBU) SUMMARY: Westinghouse expects to close its
long-awaited acquisition of South Africa's IST Nuclear
(ISTN) to augment its domestic footprint and to position
itself for supplying an initial 3,200 MW of new nuclear
power plants to state electricity company Eskom, as well
as additional plants over the longer-term. The
acquisition shows Westinghouse's commitment to
localization and building South Africa's local nuclear-
industry capacity. The acquisition also reinforces its
support for the Pebble Bed Modular Reactor (PBMR). End
Summary.

--------------------------------
Nuclear New Build - Neck in Neck
--------------------------------

2. (SBU) Westinghouse and Areva of France have been
identified by Eskom and the SAG as the two likely vendors
to build two-three new nuclear power plants totaling
about 3,200 MW. Eskom has stated that an investment
decision should be made by March 2008. The SAG intends
to install 20,000 MW of nuclear power as part of an
ambitious 40,000 MW expansion program over the next
twenty years (reftels).

----------------------------------------
Domestic Footprint Augments Localization
----------------------------------------


3. (SBU) Westinghouse Regional VP for South Africa Rita
Bowser stated that the acquisition of South Africa's ISTN
should be consummated by November 2, speaking in an
interview with local Engineering News. In the article,
Bowser said the purchase is aligned to the aspiration to
position the company for the likely pipeline of work in
South Africa. She said Westinghouse aimed to respond to
the SAG's stated objective of seeking to build local
nuclear industry capacity. Bowser emphasized that the
ISTN acquisition showed Westinghouse's commitment to
localization. In addition, she said Westinghouse
intended to expand ISTN's scope to include work in
servicing existing light water reactors in South Africa
and elsewhere. The name ISTN will change to Westinghouse
Electric Company South Africa and Westinghouse's domestic
employee base will be 118 people.

----------------
Support for PBMR
----------------

4. (SBU) According to the article, the purchase of ISTN
by Westinghouse is also an indication of the company's
growing interest in, not just South Africa's conventional
nuclear reactors, but also its Pebble Bed Modular Reactor
(PBMR). ISTN is already a leading provider of services
and systems for the PBMR, in which Westinghouse, together
with the Industrial Development Corporation, Eskom, and
the SAG, holds equity. Speaking to the a recent Idaho
National Laboratory delegation, ISTN official Andrew
Rossouw enthusiastically described the history and
potential of PBMR, including his company's role as key
supplier of testing facilities and equipment (Reftel A).

5. (SBU) COMMENT: The acquisition of ISTN demonstrates
QWestinghouse's strength in localization. Westinghouse
also competes well on price, safety, modular design, and
training. Embassy is working closely with Westinghouse

PRETORIA 00003839 002.4 OF 002


on how best to support its bid. The Economic Counselor
will participate in some Westinghouse-sponsored events at
the Corporate Council on Africa meetings November 15-16.


BOST

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